Your credit score is a numerical value that reflects your creditworthiness, or your ability to pay back a loan. Your score is calculated from the information on your credit report using a standard formula that analyzes your payment history, credit usage, length of credit history, bankruptcies, and more. The higher the credit score, the better. A low credit score may indicate to potential lenders that you are a bad credit risk and have trouble paying off debt, whereas a higher score indicates that you handle your finances responsibly and can be trusted to pay back loans. Knowing your credit score allows you to improve your rating and obtain less costly loans.
VantageScore, with scores ranging from 300 to 850, is a user-friendly credit score model developed by the three major nationwide credit reporting agencies, Experian, TransUnion, and Equifax. VantageScore is used by some, but not all lenders. Higher scores represent a greater likelihood that you'll pay back your debts so you are viewed as being a lower credit risk to lenders. A lower score indicates to lenders that you may be a higher credit risk.
There are three different major credit reporting agencies, Experian, TransUnion, and Equifax that maintain a record of your credit history known as your credit file. Credit scores are based on the information in your credit file at the time it is requested. Your credit file information can vary from agency to agency because some lenders report your credit history to only one or two of the agencies. So your credit scores can vary if the information they have on file for you is different. Since the information in your file can change over time, your credit scores also may be different from day-to-day. Different credit scoring models can also give a different assessment of the credit risk (risk of default) for the same consumer and same credit file.
There are different credit scoring models which may be used by lenders and insurers. Your lender may not use VantageScore, so don't be surprised if your lender gives you a score that's different from your VantageScore. (And your VantageScore may differ from your score under other types of VantageScores). Just remember that your associated risk level is often the same even if the number is not. For some consumers, however, the risk assessment of VantageScore could vary, sometimes substantially, from a lender's score. If the lender's score is lower than your VantageScore, it is possible that this difference can lead to higher interest rates and sometimes credit denial.
Your credit report consists of four main categories of information:
Personal information: Includes your name, current and previous addresses, social security number, telephone number, date of birth, and current and previous employers.
Credit History: The majority of your credit report is comprised of information on credit accounts that were opened in your name. Details about these accounts, including the date the account was opened, the credit limit or amount of the loan, the payment terms, balance and a history of your payment records on each account is also included. Closed or inactive accounts, depending on the manner in which they were paid, stay on your report for 7-11 years from the date of their last activity.
Credit Inquiries: Each time a third party, such as a creditor, potential lender, or insurer pulls your credit report, it is recorded on your file as a credit inquiry. Inquiries remain on your credit report for up to 2 years.
Public Records: Public records obtained from government sources including bankruptcies, tax liens, collections and records of overdue child support are also recorded on your credit report. Public information stays on your credit report for up to 7 years.
You should check your credit report on a regular basis. Your credit worthiness can have a significant impact on your financial future. With good credit, it is easier to take out loans, mortgages and auto leases and you are more likely to receive low-interest credit cards. Even if you do pay all of your bills on time, checking your credit report consistently may alert you of inaccuracies on your credit file, or of signs of potential Identity Theft.
Anyone with a legitimate business need or a permissible purpose can gain access to your credit history. This includes potential lenders, doctors, landlords, utility companies, creditors, insurers, car dealers, lawyers and potential employers. Permissible Purpose is defined in section 604 of the Fair Credit Reporting Act (FCRA) which specifies who can access your credit report and why.
A single-bureau credit report provides information from only one of the three national credit reporting agencies, where as a triple-bureau credit report provides information as reported by all three national credit agencies (Experian, Equifax and TransUnion).
The three national credit reporting agencies do not have the same information on file. While many creditors and lenders report information to all three agencies, some only report to one or may chose not to report to any. Therefore, each agency contains different records depending on who reported to them, and what was reported.
Because the three national credit reporting agencies are independent of one another and do not exchange information, one credit agency may have records about you that another does not. By checking your information from all three national credit reporting agencies, you can see precisely what others see when they inquire about your credit. In addition, you can ensure the accuracy of your credit records and avoid Identity Theft.
FreeScoresAndMore Credit Monitoring continuously examines your accounts for changes made to your credit file including inquiries, derogatory information, accounts opened in your name, or changes to your public records. If certain changes have been detected, you will be sent an alert via email on a daily basis. We'll also send you an all-clear notification on a quarterly basis, if there are no changes to your credit record.
When a third party looks at your credit information, this is called an inquiry and is recorded on your credit report. Credit inquiries are classified as either hard or soft depending on who looks at your credit information. A hard inquiry is generated when a potential creditor or lender checks your credit history for the purpose of lending you money. This type of inquiry can directly affect your credit score because if you have too many hard inquiries, a potential creditor may think you have asked for too many loans, and therefore would not be a good credit risk. Unlike hard inquiries, soft inquiries do not adversely affect your credit score, and occur when your credit is checked for other reasons, such as when you pull your own credit report.
No. When you pull your own credit report, it is considered a soft inquiry. Because soft inquiries cannot be seen by creditors, they will not adversely affect your credit rating and will not appear on your credit report.
Yes. Under the Fair and Accurate Credit Transactions Act (FACT ACT) consumers are entitled to access the information in their credit file from each of the three national credit reporting agencies once per year. For more information, please visit the FCRA page. To obtain your free annual credit report, go to www.annualcreditreport.com.
FreeScoresAndMore often delivers online credit reports in seconds. But there are instances when we are prohibited from doing so. These include:
We are unable to verify your identity. Before receiving your credit report, you must complete an authentication process. If some or all of these verification questions are answered incorrectly, you will have the option of going through further verification over the phone with a trained representative from our Credit Information Hotline.
The credit bureau does not have adequate information on file to compile a credit report. Individuals with little or no credit history will generally not be able to view a report.
We are experiencing a temporary technical issue.
One of the three credit bureaus is temporarily down.
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When you request a credit report through our service for the first time, you are required to go through an authentication process so that we can verify your identity and assure that your credit file is disclosed only to you. For your protection, if your identity cannot be authenticated you will have the option of going through further verification over the phone with a trained representative from our Credit Information Hotline.
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Identity theft is when someone steals your personal identity and assumes your identity as their own. This can include opening up new accounts in your name, applying for loans or mortgages, and make charges to your credit cards, all which can affect your credit rating and hurt your financial future. Identity Theft remains as one of the fastest growing crimes in the U.S, affecting millions of Americans each year.
One of the best ways to protect yourself from Identity Theft is to regularly monitor your credit file. By keeping on top of your credit, you can view recently opened accounts and detect possible signs of Identity Theft.